Just days after LightSquared hired an all-star team of legal experts, Sprint told the company to look for new partners. Sprint has extended the deadline for FCC approval of LightSquared's network several times. Patience is a virtue, but there's no point in overdoing it.
The original 15-year agreement came with some contingencies, allowing Sprint to pull out by returning $65 million of LightSquared's unused network-building funds. While hardly pocket change, that cost pales next to the $9 billion Sprint planned to pay for the hybrid tower-and-satellite network. It's also cheap in comparison to the $6.5 billion of cash and radio licenses AT&T (NYSE: T ) had to cough up when its proposed merger with T-Mobile USA died.
To steal a line from Jerry Maguire, nobody said that winning was cheap. Especially not in the smartphone market, where AT&T and Verizon (NYSE: VZ ) set the rules while smaller players like Sprint struggle to survive.
So Sprint has found a whole new level of commitment to Clearwire (Nasdaq: CLWR ) , which runs a more conventional 4G LTE data network on cell phone towers nationwide. The LightSquared deal was a thinly veiled attempt to become the biggest name in rural mobility. Covering the countryside in tower-based cell signals of high quality is not a cheap project. Just ask Alaska Communications Systems (Nasdaq: ALSK ) , which put the brakes on its superb dividends just to catch up on its 4G build-out costs in 2012.
Maybe LightSquared can regroup and just sell a satellite-bound solution to Sprint and others, forgetting all about the controversial land-based component and its impact on GPS signals. It certainly sounds better than giving up the ghost altogether. I'm just glad I don't have a financial stake in LightSquared's survival at this point.
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